AMG reports first quarter 2011 results
(Thomson Reuters ONE) -
Key Highlights
* Revenue was $318.0 million in the first quarter 2011, a 35% increase over
the same period in 2010
* Operating profit was $17.4 million in the first quarter 2011, a 48% increase
over the same period in 2010
* EBITDA[1] was $26.2 million in the first quarter 2011, a 19% increase over
the same period in 2010
* EPS on a fully diluted basis was $0.25 compared to $0.00 in the first
quarter 2010; excluding Timminco, EPS was $0.41 in the first quarter 2011,
compared to $0.11 in the first quarter 2010
* The Advanced Materials Division generated revenue of $210.8 million and
EBITDA of $14.6 million in the first quarter 2011
* The Engineering Systems Division generated revenue of $64.9 million and
EBITDA of $5.3 million in the first quarter 2011
* Graphit Kropfmühl generated revenue of $42.3 million and EBITDA of $6.3
million in the first quarter 2011
* As of March 31, 2011 cash on hand was $66.1 million; net debt was $201.0
million
Amsterdam, 11 May 2011 (Regulated Information) --- AMG Advanced Metallurgical
Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported first quarter 2011
revenue of $318.0 million, a 35% increase from $235.8 million in the first
quarter 2010.
EBITDA increased 19% to $26.2 million in the first quarter 2011 from $22.0
million in the first quarter 2010. Net profit attributable to shareholders for
the first quarter 2011 was $7.0 million, or $0.25 per fully diluted share. This
was up from breakeven, or $0.00 per fully diluted share, in the first quarter
2010. Excluding AMG's share of Timminco's net loss in the first quarter, AMG's
net profit attributable to shareholders for the first quarter 2011 was $11.4
million, or $0.41 per fully diluted share compared to $0.11 in the first quarter
2010.
Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "The
business performed well in the first quarter 2011. Improved pricing in a number
of Advanced Materials products such as antimony, chromium and tantalum resulted
in increased earnings. Engineering Systems' order intake was encouraging,
however, revenue was flat compared to the same period in the prior year and
EBITDA decreased. Increases in silicon metal prices and natural graphite demand
resulted in significant improvements in Graphit Kropfmühl's revenue and earnings
during the quarter. AMG's implementation of vertical raw material strategies,
horizontal consolidation and continued investment in technology has contributed
to the Company's positive start to 2011."
[1] EBITDA is defined as earnings before interest, tax, depreciation and
amortization and excludes nonrecurring items
Key Figures
In 000's US Dollar
Q1'11 Q1'10 Change
Revenue $317,999 $235,793 35%
-------------------------------------------------------------------------------
Gross profit 59,780 42,584 40%
Gross margin 18.8% 18.1%
-------------------------------------------------------------------------------
Operating profit 17,406 11,787 48%
Operating margin 5.5% 5.0%
Net profit (loss) attributable to shareholders
6,972 (64) N/A
-------------------------------------------------------------------------------
EPS- Fully diluted 0.25 0.00 N/A
Adjusted EPS- Fully diluted (1) 0.41 0.11 273%
EBIT (2) 18,854 15,866 19%
EBITDA (3) 26,168 22,047 19%
EBITDA margin 8.2% 9.4%
-------------------------------------------------------------------------------
Note:
(1) Adjusted to exclude all Timminco results including equity losses which
accounted for $0.16 in EPS in Q1 2011
(2) EBIT is defined as earnings before interest, tax and excludes nonrecurring
items
(3) EBITDA is defined as earnings before interest, tax, depreciation and
amortization and excludes nonrecurring items
Operational Review
Advanced Materials Division
Q1'11(1) Q1'10 Change
------------------------------------------------------
Revenue $210,845 $140,534 50%
Gross margin 32,380 21,136 53%
Operating profit 9,153 4,301 113%
EBITDA 14,563 8,499 71%
Capital expenditures 5,554 3,321 67%
(1) Results include KB Alloys LLC from the February 18, 2011 date of acquisition
The Advanced Materials division's first quarter 2011 financial results were
positively impacted by the acquisition of KB Alloys LLC, increasing chromium
metal and aluminum master alloy volumes and a rise in antimony prices. Revenue
increased by $70.3 million or 50% to $210.8 million. The increase in revenue
was specifically the result of $11.0 million of revenue from KB Alloys LLC,
which was acquired in February 2011, and a 37% and 34% increase in chromium and
non-KB Alloys aluminum revenue, respectively.
The first quarter 2011 gross margin of 15% of revenue was consistent with the
first quarter of 2010. Increased economies of scale were offset by unfavourable
changes in product mix, specifically increased lower margin aluminum products
revenue, resulting in consistent gross margins.
The first quarter 2011 EBITDA increased by $6.1 million to 7% of revenue from
6% of revenue in 2010, due to the increase in gross profit, but this was offset
by a 44% increase in SG&A due to the acquisition of KB Alloys and long-term
incentive expenses.
Capital expenditures were $5.6 million for the quarter, 67% more than the first
quarter 2010. Significant growth capital investments made in the first quarter
included a $1.1 million investment in the hydropower facility in Brazil.
Engineering Systems Division
Q1'11 Q1'10 Change
----------------------------------------------------------------
Revenue $64,887 $65,313 (1%)
Gross margin 18,464 18,303 1%
Operating profit 2,970 7,169 (59%)
EBITDA 5,256 12,079 (56%)
Capital expenditures 1,544 845 83%
The Engineering Systems division's first quarter 2011 revenue was flat compared
to the first quarter 2010 as a slightly higher opening order backlog in 2011 was
offset by longer project lead times. The order backlog increased to $195.9
million as of March 31, 2011, up 7% from $183.3 million as of December
31, 2010. The division generated order intake of $65.7 million in the first
quarter 2011, a 1.01x book to bill ratio and a 71% increase compared to the
first quarter 2010. Order intake of solar silicon DSS furnaces improved 301%
from the first quarter 2010, accounting for 43% of total order intake. Demand
for vacuum furnaces for specialty steel used in aerospace and energy also
increased substantially compared to the same period in the prior year.
Sales of solar silicon DSS furnaces decreased 42% in the first quarter 2011
compared to the same period in 2010, however, sales were still 27% of revenue in
the first quarter 2011. Revenue from remelting systems, primarily for the
aerospace and specialty steel industries, decreased by 20% to $10.7 million in
the first quarter 2011 while the Own and Operate business increased revenue by
57% to $9.8 million.
The first quarter 2011 gross margin of 28% of revenue was flat compared to the
first quarter 2010 as a result of level revenue and production cost controls.
First quarter 2011 EBITDA decreased by $6.8 million to 8% of revenue from 18% of
revenue in the first quarter 2010 due to increases in long-term incentive
expenses and costs associated with the acquisition of the Mono2(TM) technology.
Capital expenditures were $1.5 million, 83% more than the first quarter of
2010. This growth capital investment is creating additional capacity for its
U.S. Own and Operate facility to meet increasing demand.
Graphit Kropfmühl
Q1 '11 Q1 '10 Change
--------------------------------------------------------
Revenue $42,267 $29,946 41%
Gross profit 8,936 3,145 184%
Operating profit 5,283 317 1567%
EBITDA 6,349 1,469 332%
Capital expenditures 1,151 980 17%
Increasing silicon metal prices and natural graphite volumes resulted in
significantly improved financial results for Graphit Kropfmühl ("GK") in the
first quarter 2011. First quarter 2011 revenue increased by $12.3 million, or
41%, to $42.3 million. Natural graphite revenue increased $5.3 million, or
57%, driven by increases in both volumes and pricing. Silicon metal revenue
increased by $7.0 million or 34%, primarily as a result of higher silicon sales
prices.
The first quarter 2011 gross margin increased to 21% of revenue from 11% of
revenue in the first quarter of 2010. Increased economies of scale resulting in
lower per unit production costs of natural graphite and higher sales prices for
silicon metal resulted in a significant increase in gross margins.
First quarter 2011 EBITDA was $6.3 million, a 332% increase compared to the
first quarter 2010. The EBITDA margin increased to 15% in the first quarter
2011, up significantly from 5% in the same period 2010. The EBITDA margin
increase was attributable to the increase gross margins for silicon metal and
natural graphite, slightly offset by a 22% increase in SG&A due to incentive
plan expenses.
Capital expenditures increased to $1.2 million in the first quarter 2011, 17%
more than the first quarter 2010. The increase in capital expenditures was a
result of upgrading the high purity natural graphite production facility to meet
market demand.
Timminco
AMG's ownership in Timminco was 42.5% as of March 31, 2011. AMG accounts for its
investment in Timminco via the equity accounting method. Timminco's loss for
the first quarter 2011 is included in share of loss of associates on AMG's
income statement and the carrying value of AMG's investment in Timminco of $13.3
million is listed as an asset on AMG's balance sheet. Additional information on
Timminco can be found at www.Timminco.com.
Financial Review
Tax
AMG recorded a tax expense of $5.0 million in the first quarter 2011 as compared
to a tax expense of $3.9 million in the first quarter 2010. Excluding share of
loss of associates, for which AMG cannot recognize a tax benefit since these
companies are not consolidated, AMG's effective tax rate was 29% in the first
quarter 2011.
SG&A
AMG's SG&A expenses were $42.9 million in the first quarter 2011, compared to
$30.6 million in the first quarter 2010. The $12.3 million change in SG&A
expenses was primarily due to an increase in long-term incentive expenses as
well as acquisition costs related to the KB Alloys LLC transaction and the
additional SG&A expenses incurred by AMG Idealcast Solar (formerly BP Solar),
and KB Alloys LLC.
Currency Fluctuations
AMG transacts business in many currencies other than the US dollar, our
reporting currency. As our financial statements are prepared in US dollars,
fluctuations in the exchange rates between the US dollar and other currencies
have an effect both on our results of operations and on the reported value of
our assets and liabilities as measured in US dollars. The decline in the value
of the US dollar as of March 31, 2011 resulted in an increase in the assets and
liabilities on the balance sheet of $32.5 million and $25.4 million,
respectively. The net result of the appreciation in the value of the US dollar
quarter over quarter resulted in a decrease in revenue and EBITDA of $2.2
million and $0.3 million, respectively in the first quarter 2011.
Liquidity
March 31, 2011 December 31, 2010 Change
-----------------------------------------------------------------------------
Total debt $267,060 $237,089 13%
Cash & short-term investments 66,071 89,311 (26%)
-----------------------------------------------------------------------------
Net debt 200,989 147,778 36%
AMG had a net debt position of $201.0 million as of March 31, 2011. AMG's net
debt position increased $53.2 million since December 31, 2010 primarily due to
$16.3 million of cash tax payments, $8.2 million in capital investments, the
$24.3 million acquisition of KB Alloys LLC, and a $39.1 million increase in
working capital due to increasing material costs, reduced by EBITDA of $26.2
million.
Following the close of the first quarter, AMG refinanced its primary credit
facility and secured a $300 million credit facility composed of a Euro
denominated, U.S. dollar equivalent, $100 million term loan and a $200 million
revolving credit facility. This facility has a five-year term and matures in
April 2016.
Cash Flow
Q1'11 Q1'10
------------------------------------------------------------------------
Net cash flows used in operations $(13,753) $(14,921)
------------------------------------------------------------------------
Capital expenditures (8,249) (5,146)
Acquisitions, net of cash (26,823) (600)
Cash flows used in other investing 2,195 (191)
------------------------------------------------------------------------
Net cash flows used in investing activities (32,877) (5,937)
------------------------------------------------------------------------
Cash flows generated from financing activities 19,389 7,643
------------------------------------------------------------------------
Cash flows used in operations were $13.8 million in the first quarter 2011 as
compared to $14.9 million in the first quarter 2010. The cash flows used in
operations in the first quarter 2011 are a result of $16.3 million in cash tax
payments as well as a $29.0 million increase in working capital and provisions,
offset by $26.2 million in EBITDA. The substantial cash tax payments are
partially due to the difference between IFRS percentage of completion accounting
as compared to completed contract methodology for tax payments in the
Engineering Systems division.
Cash used in investing activities was $32.9 million in the first quarter 2011.
This increase of $26.9 million from the first quarter 2010 is composed of a
$26.2 million increase in acquisitions, primarily for KB Alloys LLC, and a $3.1
million increase in capital investments, slightly offset by a $2.4 million
decrease in cash flows in other investing activities due to a decrease in
restricted cash for project work at the Engineering Systems division.
Cash generated from financing activities was $19.4 million in the first quarter
2011, an $11.8 million increase from the first quarter 2010. This increase was
primarily attributable to $15.0 million in draws on the revolving lines of
credit, which were used to fund the acquisition of KB Alloys LLC.
Outlook
The Advanced Materials division is experiencing strong prices for some of its
products including antimony trioxide, tantalum and chromium metal and improved
operating results reflecting cost improvements made in 2009 and 2010. Requests
for new orders in Engineering Systems are slowly increasing. Graphit
Kropfmühl's end markets are improving, particularly natural graphite demand and
silicon metal prices. Based upon current market conditions, AMG expects to
generate EBITDA growth in excess of 20% in 2011.
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated income statement
For the three months ended March 31
In thousands of US Dollars 2011 2010
Unaudited Unaudited
Continuing operations
Revenue 317,999 235,793
Cost of sales 258,219 193,209
Gross profit 59,780 42,584
Selling, general and administrative
expenses 42,937 30,614
Restructuring expense 285 7
Environmental expense 105 257
Other income, net (953) (81)
Operating profit 17,406 11,787
Finance expense 3,760 6,320
Finance income (3,255) (547)
Foreign exchange gain (17) (2,164)
Net finance costs 488 3,609
Share of loss of associates 4,377 4,395
Profit before income tax 12,541 3,783
Income tax expense 4,964 3,867
Profit (loss) for the period 7,577 (84)
Attributable to:
Shareholders of the Company 6,972 (64)
Non-controlling interests 605 (20)
7,577 (84)
Earnings per share
Basic earnings per share 0.25 0.00
Diluted earnings per share 0.25 0.00
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of financial
position
In thousands of US Dollars
March December 31,
31, 2011 2010
Unaudited Audited
Assets
Property, plant and equipment 244,724 228,612
Intangible assets 36,641 27,002
Investments in associates and joint ventures 22,376 25,186
Deferred tax assets 23,716 22,107
Restricted cash 11,179 12,528
Notes receivable 733 322
Derivative financial instruments 7,427 5,199
Other assets 16,504 15,372
Total non-current assets 363,300 336,328
Inventories 244,920 207,204
Trade and other receivables 206,247 175,421
Derivative financial instruments 7,287 5,731
Other assets 43,427 41,080
Cash and cash equivalents 66,071 89,311
Total current assets 567,952 518,747
Total assets 931,252 855,075
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of financial position (continued)
In thousands of US Dollars
December 31,
March 31, 2011 2010
Unaudited Audited
Equity
Issued capital 741 741
Share premium 381,636 381,636
Other reserves 42,210 36,158
Retained earnings (deficit) (189,523) (196,481)
Equity attributable to shareholders of the
Company 235,064 222,054
Non-controlling interests 13,188 11,911
Total equity 248,252 233,965
Liabilities
Loans and borrowings 211,027 187,813
Employee benefits 95,011 88,372
Provisions 21,097 20,607
Government grants 636 642
Other liabilities 5,848 5,517
Derivative financial instruments 470 698
Deferred tax liabilities 27,983 25,436
Total non-current liabilities 362,072 329,085
Loans and borrowings 4,820 4,254
Short term bank debt 51,213 45,022
Government grants 187 175
Other liabilities 55,732 43,287
Trade and other payables 115,877 102,253
Derivative financial instruments 3,971 1,754
Advance payments 53,541 49,597
Current taxes payable 15,749 24,979
Provisions 19,838 20,704
Total current liabilities 320,928 292,025
Total liabilities 683,000 621,110
Total equity and liabilities 931,252 855,075
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of cash flows
For the three months ended March 31
In thousands of US Dollars 2011 2010
Unaudited Unaudited
Cash flows used in operating activities
Profit (loss) for the period 7,577 (84)
Adjustments to reconcile profit (loss) to net cash flows:
Non-cash:
Depreciation and amortization 7,314 6,181
Restructuring expense 285 7
Environmental expense 105 257
Net finance costs 488 3,610
Share of loss of associates 4,377 4,395
Equity-settled share-based payment transactions 1,044 1,650
Cash-settled share-based payment transactions 6,832 (309)
Income tax expense 4,964 3,867
Change in working capital and provisions (29,015) (23,210)
Other (240) 2,410
Interest paid, net (1,203) (1,616)
Income tax paid, net (16,281) (12,079)
Net cash flows used in operating activities (13,753) (14,921)
Cash flows used in investing activities
Proceeds from sale of property, plant and equipment 50 17
Acquisition of associates and joint ventures - (600)
Acquisition of subsidiaries (net of cash acquired of $91) (26,823) -
Acquisition of property, plant and equipment and
intangibles (8,249) (5,146)
Change in restricted cash 1,753 (208)
Other 392 -
Net cash flows used in investing activities (32,877) (5,937)
Cash flows from financing activities
Net proceeds from issuance of debt 19,364 7,582
Other 25 61
Net cash flows from financing activities 19,389 7,643
Net decrease in cash and cash equivalents (27,241) (13,215)
Cash and cash equivalents at January 1 89,311 117,016
Effect of exchange rate fluctuations and consolidation
changes on cash 4,001 (4,944)
Cash and cash equivalents at March 31 66,071 98,857
About AMG
AMG creates and applies innovative metallurgical solutions to the global trend
of sustainable development of natural resources and CO2 reduction. AMG produces
highly engineered specialty metal products and advanced vacuum furnace systems
for the Energy, Aerospace, Infrastructure and Specialty Metals and Chemicals end
markets. AMG consists of two operating divisions, Advanced Materials and
Engineering Systems, and owns interests in publicly-listed companies Graphit
Kropfmühl AG (Deutsche Börse: GKR.DE) and Timminco Limited (TSX: "TIM").
The Advanced Materials Division develops and produces specialty metals, alloys
and high performance materials. AMG is a significant producer of specialty
metals, such as ferrovanadium, ferronickel-molybdenum, aluminum master alloys
and additives, chromium metal and ferrotitanium, for Energy, Aerospace,
Infrastructure and Specialty Metal and Chemicals applications. Other key
products include specialty alloys for titanium and superalloys, coating
materials, tantalum and niobium oxides, vanadium chemicals and antimony
trioxide.
The Engineering Systems Division designs, engineers and produces advanced vacuum
furnace systems and operates vacuum heat treatment facilities, primarily for the
Aerospace and Energy (including solar and nuclear) industries. Furnace systems
produced by AMG include vacuum remelting, solar silicon melting and
crystallization, vacuum induction melting, vacuum heat treatment and high
pressure gas quenching, turbine blade coating and sintering. AMG also provides
vacuum case-hardening heat treatment services on a tolling basis.
Graphit Kropfmühl AG is a majority controlled, publicly listed subsidiary of
AMG. Based on its secure raw material sources in Africa, China and Europe,
Graphit Kropfmühl is a specialist in the production of silicon metal and the
extraction, processing and refining of natural crystalline graphite for a wide
range of energy saving industrial applications.
Timminco Limited is a publicly listed affiliate of AMG. Timminco produces
silicon metal for the chemical, aluminum, electronic and solar industries.
Timminco also produces solar grade silicon, using its proprietary technology
for purifying silicon metal, for the solar energy industry.
With over 2,600 employees, AMG operates globally with production facilities in
Germany, the United Kingdom, France, Czech Republic, United States, China,
Canada, Mexico, Brazil, Turkey, Poland, India and Sri Lanka and also has sales
and customer service offices in Belgium, Russia and Japan (www.amg-nv.com).
For further information please contact:
AMG Advanced Metallurgical Group N.V. +1 610 975 4901
Jonathan Costello
Vice President of Corporate Communications
jcostello(at)amg-nv.com
Disclaimer
Certain statements in this press release are not historical facts and are
"forward looking." Forward looking statements include statements concerning
AMG's plans, expectations, projections, objectives, targets, goals, strategies,
future events, future revenues or performance, capital expenditures, financing
needs, plans and intentions relating to acquisitions, AMG's competitive
strengths and weaknesses, plans or goals relating to forecasted production,
reserves, financial position and future operations and development, AMG's
business strategy and the trends AMG anticipates in the industries and the
political and legal environment in which it operates and other information that
is not historical information. When used in this press release, the words
"expects," "believes," "anticipates," "plans," "may," "will," "should," and
similar expressions, and the negatives thereof, are intended to identify forward
looking statements. By their very nature, forward looking statements involve
inherent risks and uncertainties, both general and specific, and risks exist
that the predictions, forecasts, projections and other forward looking
statements will not be achieved. These forward looking statements speak only as
of the date of this press release. AMG expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward looking
statement contained herein to reflect any change in AMG's expectations with
regard thereto or any change in events, conditions or circumstances on which any
forward looking statement is based.
The full press release including tables can be downloaded from the following
link:
AMG reports first quarter 2011 results
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(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: AMG Advanced Metallurgical Group N.V. via Thomson Reuters ONE
[HUG#1514401]
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Datum: 11.05.2011 - 07:00 Uhr
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